Retail’s Brand Decision Transition

Brand integrity is always top of mind in retail, and is usually associated with brand protection, guarding against counterfeiting and trouble-shooting reputation taints (or leveraging them as a PR stunt, as Abercrombie and Fitch did by offering Jersey Shore’s Mike “The Situation” Sorrentino dough for ditching its duds).

As retailers build up their internal brand teams, staffing them with rock stars from major brand companies rather than home-grown merchants, brand integrity has evolved into internal struggle. An executive from a major retailer recently told me that determining “who owns and who influences” among the company’s merchandising and brand teams is a constant conundrum, as categories that were once managed as products are now being managed as brands. This is particularly true as retailers invest in plumping up their private brand portfolios and marketing them as a proper brand company would. Private brands are no longer the un-brands.

Brand marketing is storytelling and what might be good for a brand may not be good for sales, at least not over the short term. The first internal “sell-in” occurs when brand teams lobby for seemingly peripheral brand components that they believe are nonetheless critical to the narrative, say, a bath water pitcher within an aspirational home brand or canned artichoke hearts within an organic food line. In some cases, merchandising teams have a voice but not a vote and in others, buyer input is still part of the process.

Regardless of the balance of brand and buyer influence, retailers tell me that the real tension builds as sales roll in…or don’t. The customer doesn’t appear to understand the water pitcher, while green beans are exponentially more popular than artichoke hearts. Slow sales confirm early buyer biases and they say “it’s out!” Meanwhile, the brand team lobbies once again under the original premise: the items are no less critical when they don’t sell and sales were never the only consideration. The good news for the brand licensing industry is that, these days, the brand integrity argument tends to win at the end of the day.

Bottom line:

Product productivity is important but it’s no longer the only consideration.

Retailer brand teams are fighting the good fight, but licensors must be prepared to police brand integrity, particularly with merchandising-focused retailers or those who have high brand or marketing team turnover.

Licensees who are adept at making brand arguments, and not just buyer-focused product pitches, will win bigger programs.

Carol will be expanding on these and other aspects of the relationships between retailers and brands, and the challenge of reaching target consumers at LIMA’s upcoming Retail and Branding Conference in New York on September 13th, where she’ll join executives from HSN, Sears Holdings, and Iconix Brand Group to explore these and other retail touch point transformations. Register now!